KENNEDY SPACE CENTER, FL--The Boeing Co. will process its proposed CST-100 commercial manned spacecraft in a now-vacant space shuttle processing hangar in a first-of-a-kind deal valued at up to $50 million in state incentives, facility upgrades and financing, officials said Monday.

Using Orbiter Processing Facility No. 3 next to the Kennedy Space Center's huge Vehicle Assembly Building, Boeing expects to eventually bring up to 550 jobs to Florida's Space Coast, producing a flight-ready capsule by 2015 if the program is fully funded by Congress and if Boeing's design wins NASA development contracts.

"Today I'm happy to announce that the Boeing company has selected Florida for its commercial crew program office," said John Mulholland, program manager of Boeing's commercial crew development project. "In addition, we plan to manufacture, test and operate Boeing's CST-100 in this facility, OPF 3, and we will launch from right here on Florida's Space Coast."

He made the announcement in front of a politically star-studded crowd in OPF-3 that included Florida Gov. Rick Scott, a Republican, Lt. Gov. Jennifer Carroll, Sen. Bill Nelson, a Florida democrat who has played a key role in boosting NASA's post-shuttle budget, Rep. Bill Posey and Rep. Sandy Adams, both Florida Republicans.

Frank DiBello, president and CEO of Space Florida, a state-funded aerospace economic development agency, said the "fundamental baseline is a use agreement that we've negotiated with NASA for the facility, for access to the facility."

"We have some engineering studies underway to determine the kinds of engineering changes that are necessary to repurpose the facility and the total package of incentives, capital investment from the state and possible financing is in the neighborhood of $40 (million) to $50 million," he said. "There could well be access to financing beyond that depending on the nature of the work to be done."

Former shuttle commander Robert Cabana, director of the Kennedy Space Center, said the deal was a win-win arrangement for the government.

"There is no financial exchange of funds between space Florida and KSC," he said. "We are turning over the use of the OPF bay three, which NASA no longer has a definitive need for and that we do not have funding to maintain. We would be tearing it down, so we are allowing Space Florida, through this use agreement, to have it for 15 years ... at no cost to NASA."

Space Florida, in turn, will lease the building to Boeing for processing its CST-100 spacecraft, along with NASA's shuttle main engine processing facility and processing control center.

"We will use OPF-3 to manufacture, assemble, refurbish and test the CST-100," Mulholland said. "We can handle multiple CST-100s simultaneously depending on the schedule and the need."

But the deal is contingent on Boeing winning upcoming NASA contracts to begin actual development of the proposed capsule.

Boeing is one of four companies currently designing commercial manned spacecraft under NASA Space Act Agreements aimed at coming up with feasible designs for safe, relatively inexpensive post-shuttle transportation to and from the International Space Station.

Boeing's battery-powered CST-100 will seat up to seven astronauts, launching from the Cape Canaveral Air Force Station atop a United Launch Alliance Atlas 5 rocket. Space Exploration Technologies of Hawthorne, Calif., is designing a manned version of its Dragon cargo capsule that will fly on the company's Falcon 9 rocket. The SpaceX rocket and capsule will be built in Hawthorne and shipped to Cape Canaveral for final processing and launch.

Sierra Nevada of Sparks, Nev., is developing a winged lifting body that could launch from Florida on an Atlas 5 rocket and, unlike the other competitors, land on a runway. Blue Origin of Kent, Wash., is working on yet another capsule design that also would utilize an Atlas 5 launched from Cape Canaveral.

NASA plans to award development contracts next spring to begin more detailed design work with additional government oversight. But funding remains a major question mark. The Obama administration's fiscal 2012 budget includes $850 million for commercial crew development. The House version of the budget cuts that to $312 million while the Senate supports $500 million.

With full funding, the commercial providers believe operational manned spacecraft would be ready for test flights in 2015. If funding is reduced, initial flights could be delayed to 2017 or even 2018. In the meantime, NASA will be forced to continue buying seats on Russian Soyuz spacecraft -- at some $60 million per astronaut -- for U.S., European, Japanese and Canadian space station fliers.

"The future of the nation's future commercial space capabilities rests in the hands of many others who must come together in support of these critical capabilities," said DiBello. "Only the Congress can determine when we will stop the investment of our nation's tax dollars into the purchase of continued space transportation service from the Russians.

"It's a national imperative that we have a strong commercial space capability in our industry to stand along side our nation's civil space exploration program led by NASA. We can no longer afford to be at risk of a single point failure as we strive to utilize the world's greatest engineering achievement, the International Space Station, and we need commercial space transportation capabilities sooner, rather than later."

Lower funding and a subsequent delay in spacecraft availability "is unacceptable for us to have the best chance of gaining a return on investment from the ISS for the nation's citizen taxpayers, who paid almost $100 billion to build it," DiBello said. "Adequate and timely investment by congressional leadership is a requirement, and we think the administration's budget request for commercial crew should be fully supported."

Boeing's commercial space effort currently employs about 30 people in Florida and another 170 or so in Texas and California. Mulholland said the workforce will be concentrated in Florida assuming Boeing wins additional contracts, rising to around 450 in late 2015 if the program is fully funded.

John Elbon, vice president and general manager of Boeing's space exploration division, said being able to lease OPF-3 for CST-100 processing, rather than building a new facility from scratch, was a key element in the company's business model.

"Another one, of course, is there's a great local workforce here we can tap into that know about manufacturing, processing, preparing for launch," he said. "Finally, I would mention it was important to us to collect all of our programs in a single location so we get the synergy associated with having a single set of engineers to support the manufacturing, do the sustained engineering, do the refurbishment, do the launch operations, etc.

"There were several reasons why it made sense for us to do this, but clearly the ability to have an asset that we didn't need to own, that we could lease in partnership with Space Florida, was a contributing factor."

NASA built three orbiter processing facilities to service and refurbish the agency's fleet of space shuttles, equipping them with custom gantries, access platforms, hydraulic systems and propellant servicing equipment that accommodated the shape of the winged spaceplanes. Shuttle-specific equipment presumably will be removed from OPF-3 to make way for use by Boeing.

DiBello and Cabana said OPFs 1 and 2, along with other no-longer-needed shuttle facilities at KSC, also will be available for commercial use.